Question 1

Suppose the government imposes a price ceiling on gasoline that is less than the equilibrium price. As a result

Accepted Answer

A)  the price of gasoline rises to the equilibrium price. 
B)  there is incentive for buyers to undertake search activity. 
C)  the supply of gasoline will increase and the supply curve will shift rightward. 
D)  the demand for gasoline will decrease and the demand curve will shift leftward. 
A)  the price of gasoline rises to the equilibrium price. 
B)  there is incentive for buyers to undertake search activity. 
C)  the supply of gasoline will increase and the supply curve will shift rightward. 
D)  the demand for gasoline will decrease and the demand curve will shift leftward.

Question 2

Explain why a price floor set below the equilibrium price is ineffective.

Accepted Answer

Price floors are legal minimums; it is l

Question 3

-The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $400, how many apartment units are rented?

Accepted Answer

A)  2,000 
B)  3,000 
C)  4,000 
D)  None of the above answers is correct. 
A)  2,000 
B)  3,000 
C)  4,000 
D)  None of the above answers is correct.

Question 4

How does the elasticity of demand for labor affect the deadweight loss from an increase in the minimum wage? Why?

Accepted Answer

The more elastic the demand for labor, t

Question 5

Which of the following outcomes is NOT a result of a tax imposed on sellers of gasoline?

Accepted Answer

A)  Supply decreases, a deadweight loss is created, and the price rises. 
B)  The market becomes less efficient and the government collects the tax revenue. 
C)  Demand does not change, the price rises, and consumer surplus decreases. 
D)  Demand decreases, the market becomes more efficient, and the price rises. 
A)  Supply decreases, a deadweight loss is created, and the price rises. 
B)  The market becomes less efficient and the government collects the tax revenue. 
C)  Demand does not change, the price rises, and consumer surplus decreases. 
D)  Demand decreases, the market becomes more efficient, and the price rises.

Question 6

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $8 per hour, how many hours do students work?

Accepted Answer

A)  12,000 hours 
B)  9,000 hours 
C)  6,000 hours 
D)  None of the above answers is correct. 
A)  12,000 hours 
B)  9,000 hours 
C)  6,000 hours 
D)  None of the above answers is correct.

Question 7

-The figure above shows the market for milk in Cowland. A subsidy paid to producers of $1 per gallon of milk is introduced. If there are no external costs and no external benefits, the marginal cost of the last gallon of milk produced is

Accepted Answer

A)  $3.00 a gallon. 
B)  $3.50 a gallon. 
C)  $4.00 a gallon. 
D)  $4.50 a gallon. 
A)  $3.00 a gallon. 
B)  $3.50 a gallon. 
C)  $4.00 a gallon. 
D)  $4.50 a gallon.

Question 8

The incidence of sales tax is determined by the

Accepted Answer

A)  level of government (for example, local, state, or federal) which imposes the tax. 
B)  federal government in all cases. 
C)  greed of the sellers. 
D)  price elasticities of supply and demand. 
A)  level of government (for example, local, state, or federal) which imposes the tax. 
B)  federal government in all cases. 
C)  greed of the sellers. 
D)  price elasticities of supply and demand.

Question 9

"A price floor that is less than the equilibrium price leads to a shortage of the good." Is this assertion true or false? Explain your answer.

Accepted Answer

The assertion is false. A price floor is

Question 10

In the Village of Punjab, Sheryl owns a well, which is the only source of drinking water. The supply of water is perfectly inelastic at a quantity of 1,000 gallons of water per day. At a price of $2.00 per gallon, the quantity demanded per day is 1,000 gallons. The government imposes a $0.50 per gallon tax.
a) After the tax is imposed, what is the price paid by the villagers? What is the price received by Sheryl?
b) How much revenue does the government collect?
c) What fraction of the tax does Sheryl pay? What fraction is paid by the villagers?

Accepted Answer

a) Because the supply is perfectly inela

Question 11

Economists generally agree that increases in the minimum wage increase employment.

Accepted Answer

A) True 
 B)False

Question 12

The opportunity cost of buying a good includes I. the price of the good.
II) the value of time spent searching for the good.

Accepted Answer

A)  only I 
B)  only II 
C)  both I and II 
D)  neither I nor II 
A)  only I 
B)  only II 
C)  both I and II 
D)  neither I nor II

Question 13

When a minimum wage is set above the equilibrium wage rate

Accepted Answer

A)  the supply of low-skilled workers decreases and the supply curve shifts rightward. 
B)  unemployment increases. 
C)  search activity decreases. 
D)  the supply of low-skilled workers increases and the supply curve shifts leftward. 
A)  the supply of low-skilled workers decreases and the supply curve shifts rightward. 
B)  unemployment increases. 
C)  search activity decreases. 
D)  the supply of low-skilled workers increases and the supply curve shifts leftward.

Question 14

Which of the following is an economic policy that promotes the efficient quantity of apartments?

Accepted Answer

A)  a rent floor above the equilibrium rent 
B)  a rent ceiling below the equilibrium rent 
C)  a sales tax imposed on renting an apartment 
D)  none of the above 
A)  a rent floor above the equilibrium rent 
B)  a rent ceiling below the equilibrium rent 
C)  a sales tax imposed on renting an apartment 
D)  none of the above

Question 15

-The above figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. The sales tax on anti-freeze decreases the quantity of anti-freeze that automobile owners purchase by

Accepted Answer

A)  0 gallons. 
B)  1000 gallons. 
C)  2000 gallons. 
D)  3000 gallons. 
A)  0 gallons. 
B)  1000 gallons. 
C)  2000 gallons. 
D)  3000 gallons.

Question 16

If a tax is imposed in a market in which demand is perfectly inelastic

Accepted Answer

A)  the buyers pay the entire tax. 
B)  the sellers pay the entire tax. 
C)  the buyers and the sellers both pay a portion of the tax. 
D)  neither the buyer nor the seller pays the tax. 
A)  the buyers pay the entire tax. 
B)  the sellers pay the entire tax. 
C)  the buyers and the sellers both pay a portion of the tax. 
D)  neither the buyer nor the seller pays the tax.

Question 17

If enforcement is aimed at buyers of an illegal good, the result will be

Accepted Answer

A)  an increase in the short-run supply of the good. 
B)  a decrease in the short-run supply of the good. 
C)  a decrease in demand for the good. 
D)  an increase in the price of the good. 
A)  an increase in the short-run supply of the good. 
B)  a decrease in the short-run supply of the good. 
C)  a decrease in demand for the good. 
D)  an increase in the price of the good.

Question 18

If the elasticity of supply of labor is low and the elasticity of demand for labor is high, then workers pay most of the Social Security tax levied on labor.

Accepted Answer

A) True 
 B)False

Question 19

Suppose that the government wants the burden of the cigarette tax to fall equally on buyers and sellers and declares that a $1.00 tax be imposed on each. Is the burden of the tax shared equally? Why or why not?

Accepted Answer

Not necessarily. A tax has the same effe

Question 20

A production quota set below the equilibrium quantity creates

Accepted Answer

A)  a decrease in supply 
B)  a decrease in marginal cost 
C)  a rise in price 
D)  inefficient underproduction 
E)  all of the above 
A)  a decrease in supply 
B)  a decrease in marginal cost 
C)  a rise in price 
D)  inefficient underproduction 
E)  all of the above

Suppose the government imposes a price ceiling on gasoline that is less than the equilibrium price. As a result

Explain why a price floor set below the equilibrium price is ineffective.

-The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $400, how many apartment units are rented?

How does the elasticity of demand for labor affect the deadweight loss from an increase in the minimum wage? Why?

Which of the following outcomes is NOT a result of a tax imposed on sellers of gasoline?

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $8 per hour, how many hours do students work?

-The figure above shows the market for milk in Cowland. A subsidy paid to producers of $1 per gallon of milk is introduced. If there are no external costs and no external benefits, the marginal cost of the last gallon of milk produced is

The incidence of sales tax is determined by the

"A price floor that is less than the equilibrium price leads to a shortage of the good." Is this assertion true or false? Explain your answer.

Economists generally agree that increases in the minimum wage increase employment.

The opportunity cost of buying a good includes I. the price of the good. II) the value of time spent searching for the good.

When a minimum wage is set above the equilibrium wage rate

Which of the following is an economic policy that promotes the efficient quantity of apartments?

-The above figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. The sales tax on anti-freeze decreases the quantity of anti-freeze that automobile owners purchase by

If a tax is imposed in a market in which demand is perfectly inelastic

If enforcement is aimed at buyers of an illegal good, the result will be

If the elasticity of supply of labor is low and the elasticity of demand for labor is high, then workers pay most of the Social Security tax levied on labor.

Suppose that the government wants the burden of the cigarette tax to fall equally on buyers and sellers and declares that a $1.00 tax be imposed on each. Is the burden of the tax shared equally? Why or why not?

A production quota set below the equilibrium quantity creates

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 6: Government Actions in Markets

Suppose the government imposes a price ceiling on gasoline that is less than the equilibrium price. As a result

Explain why a price floor set below the equilibrium price is ineffective.

-The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $400, how many apartment units are rented?

How does the elasticity of demand for labor affect the deadweight loss from an increase in the minimum wage? Why?

Which of the following outcomes is NOT a result of a tax imposed on sellers of gasoline?

-The figure above shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at $8 per hour, how many hours do students work?

-The figure above shows the market for milk in Cowland. A subsidy paid to producers of $1 per gallon of milk is introduced. If there are no external costs and no external benefits, the marginal cost of the last gallon of milk produced is

The incidence of sales tax is determined by the

"A price floor that is less than the equilibrium price leads to a shortage of the good." Is this assertion true or false? Explain your answer.

Economists generally agree that increases in the minimum wage increase employment.

The opportunity cost of buying a good includes I. the price of the good. II) the value of time spent searching for the good.

When a minimum wage is set above the equilibrium wage rate

Which of the following is an economic policy that promotes the efficient quantity of apartments?

-The above figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. The sales tax on anti-freeze decreases the quantity of anti-freeze that automobile owners purchase by

If a tax is imposed in a market in which demand is perfectly inelastic

If enforcement is aimed at buyers of an illegal good, the result will be

If the elasticity of supply of labor is low and the elasticity of demand for labor is high, then workers pay most of the Social Security tax levied on labor.

Suppose that the government wants the burden of the cigarette tax to fall equally on buyers and sellers and declares that a $1.00 tax be imposed on each. Is the burden of the tax shared equally? Why or why not?

A production quota set below the equilibrium quantity creates

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters